In International Shipping News 02/06/2015
A relatively strong US Gulf Coast gasoline market has led Florida gasoline suppliers to retrieve barrels from storage in the Bahamas and send cargoes from Europe, trading and shipping sources said.
“There are 10 cargoes out there today,” a shipping source said Monday, adding that the vessels were bound for Florida.
Florida suppliers typically source barrels from Gulf Coast refining centers and ship them to the peninsula on barges.
However, Gulf Coast gasoline values have been strengthening over the past month on the back of stronger demand, refinery production problems and concerns about supplies after a week of severe weather in eastern Texas, making the region’s barrels appear less attractive.
Unleaded-87 barge-delivered gasoline with 7.8 RVP was assessed at $2.0643/gal on Friday. That was up 25 cents since the beginning of April, when Platts began assessing 7.8 RVP-grade gasoline.
Florida spot gasoline is currently trading at a 13-cent premium to Gulf Coast barge-delivered gasoline, market sources said.
The Florida gasoline market is strong enough to also cover shipping costs on barrels sent from Northwest Europe, one source said.
“Europe is importing cargoes into Florida as well because they land cheaper than the Gulf Coast plus freight economics,” a Gulf Coast trading source said.
IS THE GULF COAST TOO STRONG?
According to some sources, the withdrawal of barrels from storage demonstrates not just strength in the Gulf Coast, but that the region’s gasoline may be due for a correction.
One Gulf Coast trading source said he would not be surprised if there was a downward correction in Gulf Coast gasoline this week, as he believes gasoline demand expectations may be overblown.
“To me it shows the Gulf Coast is probably overvalued here,” a second Gulf Coast trading source said Monday.
New York Harbor Buckeye Pipeline-delivered CBOB with 9 RVP was assessed at $2.0043/gal on Friday, just 7.5 cents higher than Colonial Pipeline-delivered CBOB with the same RVP in the Gulf Coast.
